Thursday, November 19, 2015

Balancing Frugality

I read and participate on sites and forums dedicated to personal finance.  Sometimes, people post about things that I personally won't do to save money.

Complain about fast food service to try and get a coupon or freebie. Now this one's personal since my daughter currently works in said industry. She tells me stories of people recording interactions or complaining about a tone of voice or lack of smile. Dude (or lady), you're at a fast food restaurant. Calm down! Now, this is not to say that we won't speak up if our order is incorrect. My daughter felt really bad, but she still spoke up when her order wasn't right. But as long as you get what you paid for, there's no need to create drama.

Open credit cards or bank accounts for cash back/rewards. I only open credit cards or accounts if I actually need (or want) to do so. With Costco/Amex's impending divorce, I started keeping my eye out for credit card deals, and of course, I chose one that had rewards and a sign-up bonus, but I don't plan to open any more because I don't want the added hassle of another card to manage. I'm really happy with my credit union, and now that I'm signed up with one online bank for savings, I'm done. I had to call that online savings bank recently for one matter, and of course, they tried to sell me a checking account, but I politely declined.  I suppose I could chase $50 here or $100 there, opening up checking accounts A-Z, but it just doesn't seem worth it to me.

Buy 2 to get 1 free, or spend $x to get free shipping. I always consider it. And almost always decide against it. As an Amazon Prime member, I am used to free shipping, but if I do happen to be on other sites, it's almost always less to pay for the shipping than to get to that $ threshold. If I need 1 of an item, I don't need 3. I will save money by not buying the 2nd.

Clip coupons. When we moved, we got the Sunday paper for free for a few weeks so I went through the practice of looking at the coupons for the first couple of weeks. And found almost nothing that I'd use or want or try for 40 cents off! Needless to say, I'll never be on Extreme Couponing!

Shop on Black Friday. I've never understood the appeal of getting up in the middle of night (or whenever it starts these days) to buy a TV or whatever. I mean, I know they're supposedly great deals, but I much prefer Cyber Mondays...or just buying such things when I can afford them at the best price I can find.

This is not to say that there's anything wrong with doing those things if 1) you enjoy them, and 2) you see value in them. Ah, see what I did there? I put enjoyment before value! Because one of my friends thinks I'm crazy with my grocery spreadsheet. It's not crazy to me because I enjoy updating my grocery spreadsheet every week...and I see the value in staying on or under budget. But I don't think I'd have kept it up this long if I didn't enjoy it, too!

So this is a really long-winded way to say (again) that your values should align with your spending...and saving.

Tuesday, November 17, 2015

Surviving the Holidays on a Single Parent's Budget

So honored that Mandy Walker asked me back on her Conversations About Divorce podcast to discuss budgeting for the holidays as a single parent.

Tuesday, November 10, 2015

Avoiding Impulse Buys

I've never been into brick-and-mortar shopping. I don't even much like going to movie theatres in malls. I am, however, a big fan of online shopping. It's just so easy and convenient!

In the past few years, I've learned how to keep the ease and convenience while still remaining debt-free.

Amazon Prime is a priority for me, and I don't mind paying the annual fee (I budget $9/mo to cover it). I've decided that I will let my Costco membership expire next year, and I use Amazon Subscribe & Save in place of wandering that huge, always-crowded warehouse! And, of course, I budget for that.

Still, there are times when retail therapy sounds nice, so I may browse Amazon, but instead of adding items to my cart, I add them to my wish list. When I get my monthly cash back from my credit card, I can use that to buy something on my wish list.

Whenever I peruse my wish list, I delete those items that I don't even remember why I wanted them! If something costs more than what I have available in rewards, then I have to check the budget to see if there's enough in the relevant category to cover the difference. If not? Not buying that item this month! Things on my Wish List range from $10- hundreds so there's usually something on there that meets my rules.

If I'm on a site other than Amazon (which does happen from time to time), I may add the item to my shopping cart, but then I have to check the budget. Sometimes, I'll move things around to make it work, but most of the time, I look ahead to next month and x out of that tab with a mental note to come back on the 1st (and sometimes I do, sometimes I don't).

Just this weekend, I learned about a new product I really wanted to try that wasn't available on Amazon and frankly, it was overpriced. I added it to the Cart anyway, but then deleted it when I saw it would take 6-8 weeks to ship and really, what's the point of an impulse buy if I won't have it in 2 days? If I'm still thinking about it next month, I'll figure out a way to add it to the budget.

What I find fascinating is that clicking that "Add to Cart" or "Add to Wish List" generally satisfies that impulse for me. I don't actually have to pull out my credit card or click "complete Purchase" to feel complete. This little mental game has been effective for me almost every time. (I honestly can't think of a time where it hasn't been, but that may also be a mental trick!)

While I recommend waiting at least 24 hours (preferably 30 days) before making an impulse buy, at the very least, check your budget (or your balance) first. You will enjoy it so much more if you know you can afford it!

Thursday, November 5, 2015

Balancing the Bonus (or other windfall)

It's that time of year where you might get a bonus! Or money as a gift. Or next year, a tax refund.

In such situations, I prefer the 1/3 windfall rule I learned from The Debt-Free Spending Plan: 1/3 towards debt, 1/3 towards savings, and 1/3 towards something fun or even frivolous. I like this method because it means you're not blowing it all, nor are you "being good" with it all. You get a little closer to your financial goals and still get to treat yourself!

Since I'm now consumer-debt free, however, I don't use that exact rule. Instead, I use 1/3 towards my Emergency Fund, 1/3 towards my Car Purchase category (to stave off future debt), and 1/3 towards something fun - usually my theatre tickets category, but sometimes retail therapy. I opt not to put it towards my student loans because the interest rate is so low, I'm better off saving myself from a future car loan.

If you have more than one kind of debt, the 1/3 should go towards the one with the highest interest rate. If, however, it's enough to pay off a debt completely at a lower interest rate, by all means. Or if you could pay off a debt completely using more than 1/3, then go for it! Then split any remains evenly towards savings and fun.

Even if it's a relatively low amount left for fun, enjoy the game of getting the most bang for your buck: a manicure, a bottle of wine, even a latte! Something that feels completely indulgent to you that you can enjoy debt-free.

I know that many implore treating any debt as an emergency, but it was important for me to be able to give myself these little treats every so often to maintain a debt-free lifestyle. Further, growing that savings is just as important to living debt-free.

If you haven't yet gotten off the paycheck-to-paycheck cycle, the savings should go towards getting yourself a month ahead. First goal: $1,000. Then, a month's worth of expenses. Then another. 

If you don't have any debt, congrats! Consider investing 1/3 in something like Betterment. Or put 1/3 towards a savings category that will help you avoid debt in the future, like your kids' education (in which case, it should go into a 529), a down payment towards a house or car, or a potential large purchase in the future (like replacing your fridge, computer, etc.).

Windfalls are great for making progress towards your goals, and should also be enjoyed!